A report from CivicScience, a market research firm in Pennsylvania, caught my attention and prompted me to lean back in my chair and utter out loud, “OMG!”
The report by the well-respected firm interviewed thousands of respondents in the United States in October and came to the following conclusions: “Cryptocurrency gains may be fueling the persistent labor shortage in the U.S.” and “a number of Americans have given up their full-time jobs to take their chances on risky digital assets.”
Cryptocurrencies, such as Bitcoin, are digital assets.
A recent headline on Insider.com blared: “Crypto fever has gripped markets this year, making stars out of Dogecoin, Shiba Inu and Solana, with investors pouring a record $8.9 billion into digital coins — more than in all of 2020.”
Deep in the article comes the following: “Shiba Inu has a market capitalization of $30.6 billion despite only launching in August last year — making it the 11th biggest crypto by value, while Dogecoin is two rungs above, having gained an eye-watering 9,000% over the past 12 months, based on Binance.US data.”
I cannot recall any group of markets or investments that receive as much bullish publicity as cryptocurrencies. Each day I pour over the news about markets of all kinds and cannot count the bullish articles about cryptocurrencies.
For example, from Business Insider: “A crypto investor bought about $8,000 worth of Shiba Inu coins in August 2020. Just over a year later, the $8,000 trade has morphed into a value of about $5.7 billion. Shiba Inu coin is up more than 7,000,000% since its debut in August 2020.”
The only ugly story about cryptocurrencies I have seen took place a couple weeks ago. From BBC.com: “A digital token inspired by the popular South Korean Netflix series Squid Game has lost almost all of its value as it was revealed to be an apparent scam.”
A few weeks ago, Squid was trading at just 1 cent. In less than a week, its price had jumped to over $2,856.
But it was a scam as the buyers could not sell the coins they bought. Its value has now plummeted by 99.99%, said cryptocurrency data website CoinMarketCap.
I hate to say it — and will likely receive flak and criticism — but cryptocurrencies remind me of the “greater fool theory” that goes like this, according to Investopedia.com: “The greater fool theory argues that prices go up because people are able to sell overpriced securities to a greater fool, whether or not they are overvalued. That is, of course, until there are no greater fools left.”
In 2013, only a handful of cryptocurrencies were in existence. As of this month, there are 7,751 available to the public to buy — and more being created weekly.
From TheHill.com: Securities and Exchange Commission Chairman Gary Gensler said that the rapid proliferation of cryptocurrencies and investment products tied to them resembled the “wild west.”
In August, Neel Kashari, president and CEO of the Federal Reserve Bank of Minneapolis, called cryptocurrencies out, describing them as “fraud” and “garbage coins.”
Recently from FX Empire came this headline: “Whale acquires $3.6M worth of FLOKI token, price stands at $0.00028 each.” In crypto lingo, a whale is an account that holds a large amount of a coin and can influence its price.
Obviously, the whale was not scared off simply because a Fed governor called cryptocurrencies a “fraud,” or the chairman of the SEC described the entire crypto marketplace as the “wild west.”
The motivating force behind the frothy crypto markets is FOMO, fear of missing out, which is understandable. But I remain skeptical about the crypto markets and consider it similar to buying a lottery ticket.
However, I am also an old guy looking at a newfangled market while moving my head back and forth, left to right. Now, let me get this straight: The labor shortage is because workers are bucking low-paying jobs and trading cryptocurrencies instead?
And a number of Americans have given up their full-time jobs to trade cryptocurrencies for a living? For a living?
All I can say is, “OMG!”